Yesterday we mentioned a duplex selling in Oakland for $140,000 after previously selling for $615,000. What is even more interesting than the drop in price is the tremendous return on investment that such a property represents.
The property consists of two similar three-bedroom units. One unit is currently vacant, but the occupied unit is rented for $1,295 per month. If both units were rented, the property would provide almost $2,600 per month in rent.
Our buyers are actually owner-occupants, but if an investor bought that duplex with 25% down, he would be out of pocket no more than $45,000 for a down payment and closing costs. His total housing payment as an investor would be less than $825 per month. He would therefore have positive cash flow of approximately $1,775 per month. This works out to $21,300 per year, or a 47% return on a $45,000 investment. Even if you subtract out 10% of the total rents for vacancy and repairs, you still net over $18,000 per year in positive cash flow and get a 40% return on investment.
We recognize that this duplex is a unique situation and a better than typical deal. But, it is illustrative of the opportunities to be had in this market.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167